Allocating profits and losses to the partners, accounting for the liquidation of a partnership
ABAX is a partnership owned by Alders, Byron, and Calvin, who share profits and losses in the ratio of 1:3:4. The account balances of the partnership at June 30 follow.
ABAX Adjusted Trial Balance June 30, 2012
Account Title
Debit
Credit
Cash
$ 33,000
Noncash assets
117,000
Notes payable
$ 32,000
Alders, capital
22,000
Byron, capital
50,000
Calvin, capital
53,000
Alders, drawing
9,000
Byron, drawing
27,000
Calvin, drawing
49,000
Sales revenue
164,000
Salary expense
74,000
Rent expense
12,000
Totals
$321,000
Requirements
1. Prepare the June 30 entries to close the revenue, expense, income summary, and drawing accounts.
2. Insert the opening capital balances in the partners’ capital accounts, post the closing entries to their accounts, and determine each partner’s ending capital.
3. Prepare the June 30 entries to liquidate the partnership assuming the noncash assets are sold for $120,000.
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